Question

Problem 5-3A Record transactions related to accounts receivable (LO5-3,5-4,5-5) The following information applies to the questions displayed below. The following events occur for The Underwood Corporation during 2021 and 2022, its first two years of operations. Provide service from customers and from services June 12, 2021 Provide services to customers on account for $32,000. September 17, 2021 Receive $17,500 from customers on account. December 31, 2021 Estimate that 45% of accounts receivable at the end of the year will not be received. March 4, 2022 Provide services to customers on account for $47,000. May 2e, 2022 Receive $10,000 from customers for services provided in 2021. July 2, 2022 Write off the remaining amounts owed from services provided in 2021. October 19, 2022 Receive $37,589 from customers for services provided in 2022. December 31, 2022 Estimate that 45% of accounts receivable at the end of the year will not be received. in 2022

Answer 1

SOLUTION

Date	Accounts titles and Explanation	Debit ($)	Credit ($)
2021
June 12	Accounts receivable	32,000
	Service revenue		32,000
	(To record the service provided on account)
Sep.17	Cash	17,500
	Accounts receivable		17,500
	(To record the cash collected)
Dec.31	Bad debt expense	6,525
	Allowance for uncollectible accounts		6,525
	[(32,000-17,500)*45%]
	(To record the bad debt expense)
2022
March 4	Accounts receivable	47,000
	Service revenue		47,000
	(To record the service provided on account)
May 20	Cash	10,000
	Accounts receivable		10,000
	(To record the cash collected)
July 2	Allowance for uncollectible accounts	4,500
	Accounts receivable (32,000-17,500-10,000)		4,500
	(To write off the accounts owed)
Oct.19	Cash	37,500
	Accounts receivable		37,500
	(To record the cash collected)
Dec.31	Bad debt expense	2,250
	Allowance for uncollectible accounts		2,250
	[(47,000-37,500)*45%]-(6,525-4,500)
	(To record the bad debt expense)